From the GATT to WTO (II)

Because exchanges regulate the economy, regulating the regulator does not make any sense. This same philosophy is then applied at the international level, since human beings, not countries, make exchanges. Countries do not act, people do. Saying "France exported" or "China sold to Paris" is distorted language. In reality, individuals who live in France and constitute an enterprise called Renault have created cars that have been bought by consumers living in Spain. Hence, an American Senator will be reproached by Californian farmers for the economic competition caused by cheaper Mexican tomatoes. In the same way, French farmers lobbied to impose “community preference”, a policy which forces German people to buy in priority agricultural goods produced within the EU (i.e. in France). It might seem beneficial to promote local economy. Yet, what would our living standing standard be like if we were to live solely on what we produce? I live in Perpignan: should I only drink Catalan wine? I can buy wine produced in my area if I do like it, yet I am also free (depending on my tastes and my budget) to buy Bordeaux or Italian wine. Trade derives from freedom and prosperity from trade. Local economy will grow if American people discover and buy wine from my area.

The latest negotiations between governments at WTO have shown that mercantilism is back. Mercantilism is the denial of liberalism. Mercantilism regards the economy as a zero-sum game (what one country/individual earns is lost by another country/individual). They transpose their visions of antagonistic political forces to the economy, turning economic exchanges into economic wars the way they turn the ideas of different religions into religious wars. Protectionism is self-infliction, in peace time, of the measures our enemies would impose on us in wartime. Imposing a blockade or a state of siege on a city or a country is the best way to force it to surrender. It aims at stifling the enemy by forbidding trade. Such “imposed protectionism” is a powerful weapon which usually leads to stagnation. The opposite–free trade—produces prosperity.

This applies to all economic activity. From an economic standpoint, services are like goods: they are both produced by trade. Hence services may create markets. If producers and consumers ask the State to take part into such exchanges, the State will be forced to defend one side against the other. It will have to choose since it can neither promise to raise and reduce prices at the same time nor guarantee an equilibrium since the very notion of equilibrium is only meaningful when markets are free. The only feasible regulation and the only answer a real statesman should give is: “The State lets you trade freely !” The market transforms conflicts of interests into complementarities. For producers to exist, they need consumers; for consumers to subsist, they need producers. Producers and consumers share a common interest, the general interest, when concluding a deal: they must find an equilibrium price. If the State acts in favour of any corporation (of producers) or lobby (of consumers), force and economic war replace trade.